What is liquid staying?

In the crypto industry, the practice of stakeing is widespread: holders of crypto-actors operating in Proof-OF-Stake networks receive passive income for working with a validator or delegation to the NOD operator of their cryptocurrencies. To receive income from stakeing, you need to block cryptocurrencies in a special smart contract.

In turn, liquid staying allows you to use crypto assets even after blocking them – by obtaining a tokenized version of the basic asset.

Thus, thanks to liquid stakeing, the investor has the opportunity to receive fixed staying income and use a derivative asset in Defi applications.

How liquid staying works?

Liquidity stake is a relatively new practice, common in a small number of Defi projects.

The most famous example is Lido Finance. This protocol allows you to send various cryptocurrencies to the staying and receive in return an equal amount of liquid derivative of the asset. Thus, the user receives income from stakeing, but can also dispose of the received means. At the same time, LIDO receives 10% of the awards for staring.

Rocket Pool. Competitor LIDO in Ethereum ecosystem. Works on a similar principle, releasing RETH in exchange for blocking eTH for stakeing. The minimum entrance threshold is 0.1 ETH. RETH token can be exchanged for a more popular “wrapped” Weth on the Uniswap exchange, which opens up wide opportunities for Defi operations.

Tempus finance. It works on the Ethereum blockchain with various liquidity tokens: Steth, CDAI, ADAI, XSUSHI. TEMPUS users are offered to block these tokens for a certain period in exchange for another derivative asset, the cost of which is determined by the cost of Steth, CDAI, ADAI or XSUSHI, to which the profitability accumulated from staining for a specific date in the future is added.

Marinade. Liquid stake service on the SOLANA blockchain. In exchange for blocking the Native SOL coin in the Marinade protocol, MSOL token is produced, which can be exchanged for SOL and the income from stakeing. MSOL can be used in credit protocols, liquidity pools and profitable farm for obtaining Marinade (MNDE) management token.

Meta Pool. NEAR ecosystem service. For blocking NEAR tokens in the protocol, users receive Stnar with the ability to accumulate revenue from stakeing and maintain liquidity for work in other markets. As in previous examples, StNEAR can be used in liquidity pools or as security for a loan.

What are the risks of liquid stake?

Therefore, liquid staying cannot be called a completely safe occupation. There are at least a few risks that can be highlighted: